Google's 'effective tax rate is now around three per cent despite estimated revenues of £1billion in 2014 alone'.

Below is a copy of the letter I have written to George Osborne asking if he will now directly address some of the outstanding questions. 

Dear George, 

Since news of the tax deal between HM Revenue and Customs and Google broke on 22 January there has been much comment and discussion about the rights and wrongs of this case specifically, as well as the general principle of large companies being able to negotiate settlements such as this with the UK’s tax authorities. 

It is notable that while you have hailed the deal as “a major success”, Downing Street has instead chosen to describe it as “a step forward” with “more to do”. When there appears to be disagreement about the significance of the deal at the highest levels of government it is only right that the public is given greater clarity on the specifics of the settlement reached. 

This deal with Google raises a number of important issues about the tax treatment of large companies in the UK. For that reason I welcomed the opportunity the House of Commons was yesterday given to discuss the details of this case. However, it was disappointing that you were not present to address this issue in person. 

Yesterday’s statement in the House by the Financial Secretary to the Treasury, Mr David Gauke, left many questions unanswered. For that reason I am writing to ask if you will now directly address some of the outstanding questions: 

  • Firstly, please can you clarify exactly when you were first made aware of the details of the deal with Google? Did you (or any other Treasury Minister) personally sign it off, and were other Ministers involved in the settlement?

  • What discussions, if any, did you or members of your private office have with HMRC and with Google representatives about the deal?

  • Did HM Treasury and HMRC discuss details of the deal with Number 10 before the announcement was made?

  • What is HMRC’s understanding of the effective tax rate faced by Google over the past 10 years as a result of this settlement?

  • Are you confident that this deal will not undermine international co-operation on tax avoidance, such as the OECD base erosion and profit shifting scheme?

  • Can you clarify whether Google is changing the company structures that enabled this avoidance to take place over the past decade?

  • What concerns, if any, do you have that this agreement creates a precedent for future deals with other large technology corporations?

  • To help ensure HMRC is best placed to address complex issues like this will you now halt the programme of HMRC staffing cuts? 

I was also concerned to read in The Times this morning the revelation that HMRC officials have “never challenged” Google’s claim that it has “no permanent establishment” in the UK. Such a claim is obviously critical to the entire tax issue. Can you clarify whether the accusation in today’s Times is accurate? In addition, have you, or your office, ever raised with Google directly its claim that it does not have a permanent establishment in the UK? Furthermore, have you, or your office, ever discussed with HMRC, Google’s claim not to have a permanent establishment in the UK? 

When times are tough it is more important than ever that everyone pays – and is seen to pay – their fair share. I know that many are concerned about the tax treatment of large companies and it is important for public trust that HMRC is fair and transparent in its dealings with such companies. That is why, in the interests of openness and transparency, it is essential you provide full and frank answers to the above questions as well as commit to publishing details of the deal and how it was reached. 

Given the significant public interest in this matter, I am making this letter public. 

Yours sincerely

 

John McDonnell MP


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